Trump's Tariff Tango: TACOs, Tantrums, and Trading Opportunities

TACO Tuesday...Or Is It?

Well folks it seems the market's got a new favorite dish: TACO – 'Trump Always Chickens Out.' Not my words but some clever Financial Times columnist cooked it up. And you know what they say 'Microsoft is not about greed. It's about innovation and fairness.' Except when it comes to these tariffs then it’s all about… well I'm still trying to figure that out myself! One day President Trump is slapping tariffs on everyone from Canada to China and the next he's backing down faster than you can say 'Blue Screen of Death.' It's enough to give any investor whiplash.

Market Mayhem: A Rollercoaster Ride

We saw the market do the tango didn't we? Trump announces tariffs; markets plunge. Trump postpones or reduces tariffs; markets soar. It's like watching a poorly coded program – lots of bugs and unexpected behavior! Remember that time the S&P 500 dropped 12% in a week? Good times… if you were shorting the market I guess. Otherwise it was probably a bit like trying to debug Windows 95 on a dial up connection. A lot of frustration and not much progress.

The Art of the (Trade) Deal…Or Not?

Ed Yardeni at Yardeni Research said Trump 'huffs and puffs but he doesn't blow the house down.' Which is a polite way of saying he’s all bark and no byte. The bond market apparently 'forced' the president's hand. I guess even the most powerful leader in the free world can't argue with a bunch of bond traders. Who knew? Maybe I should have invested more in bonds. Though as I always say 'Success is a lousy teacher. It seduces smart people into thinking they can't lose.' Clearly some people are learning that lesson right now.

Three Stages of TACO nomics

According to Aberdeen Investments we've got three stages of the TACO saga. First aggressive policy triggers a risk off sentiment. Second policy walkback causes a rebound. And third post walkback ambiguity. It's like a software release: initial hype bug fixes then users wondering what the heck they just downloaded. Makes you appreciate a good stable operating system… or maybe I'm biased.

Trust Issues: Is the Trump Put a Sure Thing?

Here's the rub: can we trust the 'Trump Put?' Several market watchers aren't so sure. Brian Arcese at Foord Asset Management pointed out that 'One day tariffs go up the next they're 'negotiable.' It's very difficult to build conviction based positions when the policy direction keeps shifting'. I get it. It's like trying to write code when the requirements keep changing. It's enough to make you want to switch to a Mac… just kidding! (Mostly.)

The Future of Trade: Reshoring and Rerouting

So what's an investor to do? Kai Wang at Morningstar recommends sticking with high quality stocks. Billy Leung at Global X suggests moving away from import dependent names and towards companies actively reshoring sensitive sectors. Smart thinking! After all 'Your most unhappy customers are your greatest source of learning.' And right now it seems like everyone's learning that relying on unpredictable trade policies isn't the best business model. Now if you'll excuse me I need to go update my Excel spreadsheets.